Accessing Remote Software Markets

More often than not, software companies start off selling and marketing in their home market. This isn’t always the case, but it is true in the vast majority of cases. This occurs when a home market focus is intended to build an initial reference customer list of 10-20 customers, or lasts until the company establishes a dominant position in its home market. This usually isn’t the final endpoint for the company’s products. Eventually, most companies set their sights on remote sales in faraway markets that they usually can’t serve in the same way from their home office. What is the best way to conduct remote software sales? Let’s take a look at a few possibilities:

Remote sales offices

This is the preferred method of remote software sales and marketing for several company profiles, including large companies with vast pools of resources. It’s also preferred by companies whose product MUST be sold directly. And finally, by those “control freaks” who just don’t play well with others. This approach plays well when the application fits into one or more of these categories:

• Expensive
• Highly technical, complex, or otherwise just not easy to use
• Requires significant customization by (or is best done by) company employees
• Long and/or difficult sales cycle
• No obvious distribution partners exist

The “Pros” to this approach are obviously the control, focus, and local expertise that come with putting “folks on the ground” in faraway local markets. For some situations, this is a no-brainer and necessary for success. However, in most circumstances, a hard analysis should be done before embarking on this path. Because the “Cons” to this approach start and really end with COST.

This can be a very expensive endeavor. It dramatically increases your fixed marketing costs and especially your sales costs. Before you make this investment, it’s imperative to make sure that 1) it’s necessary and 2) you have the financial resources to pull it off. I’ve seen many early-stage companies, in particular, make this investment by mistake. They burn through their cash before they can grow their revenue beyond their high fixed costs. The other, more minor Con to this approach is when your brand is new and you’re strictly selling direct.  In this case, you don’t get to take advantage of the brand and market position of potential partners. This potentially slows market adoption, versus what’s optimally possible through other market entry methods.

Local distributors, VARs, and other third-party resellers

The largest companies and those with products that, for various reasons, absolutely MUST be sold direct will always do so.  For all others, leveraging partners is the traditional method of accessing remote markets. At least in the early days. When working with early-stage software companies, I almost always try to introduce this distribution method.  Even if it’s part of a hybrid distribution approach. Because there’s much to be gained for a new brand by associating itself with a highly credible and well-known local partner with an existing customer base. Even if you can utilize the other methods outlined in this article, consider whether desirable local partners are available. It is usually the right thing to do to work with them. It’s often far better to give up a piece of your revenue to the most desirable local partners than to compete with them as they push your competitor’s products.

Remote software sales from HQ

Since the Internet, a third major market entry method has emerged. All selling and marketing is done “virtually” from the home office. Often, this is the first approach taken by a company out of necessity. The company lacks resources to open remote offices. It also lacks initial partner contacts or the expertise to develop an international channel partner network. But many software company business plans, particularly SaaS companies, call for this to be the primary marketing and selling method on a worldwide basis. On the surface, this is entirely possible using modern Internet marketing methods along with sales communication tools such as Zoom. And even not-so-modern ones such as email, phone, and fax. But whether this is the best market entry or long-term penetration approach depends on many factors:

• Ease of use–the easier your software product is to use, the more likely you’ll have success
• Price points–lower price points lend themselves to easier selling through lower touch methods
• Lack of obvious partner channels–while there are creative approaches possible (as I spelled out in this article), if there aren’t obvious partners and you don’t have money to open offices, remote/online is the default approach.
• Low need for localization–Marketing and selling everything from HQ works best in homogenous market segments; B2B segments in particular are easier than B2C
• Market stage–the irony here is that this method is often the primary one in newer market segments by default, but it’s easier to market/sell remotely in a more mature market segment where your solution is more well-understood and seen as less risky

What’s the optimal method for remote sales?

So at the end of the day, what remote sales method works best? Of course, there is no perfect answer to this question. Like most sales or marketing strategy questions, there is no best, one-size-fits-all method for all companies in every market situation. Carefully assess the key sales and marketing attributes required to sell your particular product effectively. Also, analyze whether the available resources are adequate to get the job done. In fact, I find in many cases a hybrid remote software sales model incorporating two or more of the approaches outlined above is necessary. That’s due to a variety of common limitations. This hybrid approach often works best in the complicated real world.

So there are some ideas to get you started in making the important decision on how to approach remote software sales. Do you agree? Other suggestions based upon your own experiences? Post a comment below to extend this discussion.

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